Service members face choice between bonuses, retirement funds

Some retirement-minded troops reaching 15 years of active service this summer will need to decide whether to accept a $30,000 cash bonus now in exchange for a reduced retirement plan after at least five more years in uniform.

The career status bonus decision will affect those troops reaching 15 years of active service on Aug. 1, said Tom Tower, assistant director of DoD's military compensation office. Affected service members joined the Cold War-era military back in 1986, or later, he added.

"It is a personal decision, and an individual should base it upon the way they see things such as personal career expectations. That would include the member's final grade at retirement and the total years of service reached, plus what you might do with the bonus money," Tower said.

Bonus-takers would retire at or after 20 years of active service at 40 percent of the average of their last three years' basic pay, he said. Service members not taking the bonus would retire at 50 percent of the average of their last three years' pay, he added. Retired pay under both systems reaches 75 percent at 30 years of service. Bonus takers would also get reduced retired pay Cost of Living Allowances.

Service members eligible for the bonus will receive notice at about 14.5 years of service, Tower said. People choosing the bonus are obligated to serve at least 20 years, he added.

"Beyond that, you could stay as long as your service will allow," Tower said. The government would recoup part of any bonus money paid to service members who don't complete at least 20 years of service, he added, exempting those who receive authorized early retirements or disability separations.

Tower said service members eligible for bonuses before March 2002 may delay their bonus decision until March 1, 2002, after the military Thrift Savings Plan has gone into effect, Tower said. This way "service members can put more into a tax protected retirement account, if they so desire," he said.

"You'll get your $30,000 and be able to put some more money toward retirement, too," Tower said. "These choices are yours to make, so take your time, be deliberate, be careful. Your choice may not be revoked."

For more information about the career status bonus, see the Web site at pay2000.dtic.mil.